Correlation Between SoundHound and China Railway
Can any of the company-specific risk be diversified away by investing in both SoundHound and China Railway at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining SoundHound and China Railway into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SoundHound AI and China Railway Group, you can compare the effects of market volatilities on SoundHound and China Railway and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in SoundHound with a short position of China Railway. Check out your portfolio center. Please also check ongoing floating volatility patterns of SoundHound and China Railway.
Diversification Opportunities for SoundHound and China Railway
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SoundHound and China is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding SoundHound AI and China Railway Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Railway Group and SoundHound is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on SoundHound AI are associated (or correlated) with China Railway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Railway Group has no effect on the direction of SoundHound i.e., SoundHound and China Railway go up and down completely randomly.
Pair Corralation between SoundHound and China Railway
Given the investment horizon of 90 days SoundHound AI is expected to generate 5.34 times more return on investment than China Railway. However, SoundHound is 5.34 times more volatile than China Railway Group. It trades about 0.2 of its potential returns per unit of risk. China Railway Group is currently generating about -0.03 per unit of risk. If you would invest 539.00 in SoundHound AI on October 20, 2024 and sell it today you would earn a total of 825.00 from holding SoundHound AI or generate 153.06% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 98.41% |
Values | Daily Returns |
SoundHound AI vs. China Railway Group
Performance |
Timeline |
SoundHound AI |
China Railway Group |
SoundHound and China Railway Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with SoundHound and China Railway
The main advantage of trading using opposite SoundHound and China Railway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SoundHound position performs unexpectedly, China Railway can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in China Railway will offset losses from the drop in China Railway's long position.SoundHound vs. Snowflake | SoundHound vs. Zoom Video Communications | SoundHound vs. Shopify | SoundHound vs. Workday |
China Railway vs. Arcadis NV | China Railway vs. VINCI SA | China Railway vs. Skanska AB ser | China Railway vs. Digital Locations |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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